JOLTS records and CPI preview!
Ahead of today's Jobless claims and Tomorrow CPI data, with another JOLTS records, US futures markets decreasing, what is behind?
According to Wednesday's f job openings numbers, labor market recovery is going well. After two consecutive months of decline in JOLTS numbers, yesterday the US data confirmed October's strong employment report with 11.033M vacancies left open to show that the decline was temporary. As the Delta wave was subsiding and businesses were ramping up hiring plans ahead of the holiday season, generally we have good enough vacancies and lower unemployment levels as well, according to the last Friday's NFP numbers. These numbers tell us that the labor market is tighter than the 4.2% official unemployment rate.
Today, we are waiting to see the initial jobless claims at 215K, which is in the norm of pre-pandemic, signaling that the labor market is already back in its normal situation.
On the inflation front, and after seeing the 6.2% in October with increasing the Unit Labor Costs in the third quarter by 9.6%, while energy price is still high, inflation shows little signs of easing. Prices for all items ranging including vehicles, houses, and goods saw sizable increases in October, and with the holiday season ahead, we doubt that prices will cool in the near term.
Therefore, while estimates are about higher inflation numbers, expectations from FED also increase to act prematurely with at least increasing the level of tapering. Increasing the level of tapering means faster ending the asset purchasing plan and it will end with an earlier rate rise. The result will not be in favor of stock markets and we can see more pressure on them with higher inflation numbers.
From the technical point of view and based on what we can see in the bellow Dow Jones H4 chart, the index started bearish signals with Parabolic SAR dots above candles, while the price is in line with the OBV trend line, both are falling. Technically, bears need to breach under 35,450 to be able to continue the way.
